$100 Million Fund Sought for 2012 Meningitis Outbreak Victims

A settlement filed with a federal bankruptcy judge would create a fund of more than $100 million to compensate victims of a nationwide fungal meningitis outbreak linked to a now closed Massachusetts compounding pharmacy.

The 2012 meningitis outbreak was traced to a tainted injectable steroid from the New England Compounding Center (NECC). More than 750 people in 20 states became sick, according to the Centers for Disease Control and Prevention (CDC), and 64 people died. The company surrendered its license after the outbreak, and later filed for bankruptcy, The Associated Press (AP) reports.

The settlement between the owners of the company and a court-appointed bankruptcy trustee must be approved by the judge, Henry Boroff. The owners would pay $50 million into the fund; insurers would contribute another $25 million; and a possible $20 million in tax refunds would be added to the fund, according to the AP. The sale of an affiliated company would bump the fund’s total to more than $100 million.

An attorney representing victims who sued NECC said the settlement is “another important step in a frustratingly long process to get fair compensation to hundreds of victims of the meningitis outbreak.” The attorney said he hopes to see the plan approved by the end of 2014 so distributions to victims could begin in early 2015, the AP reports. The money would go to the families of those who died, those who sustained serious injuries after being injected with the steroid, and to other creditors. The victims developed fungal meningitis, an inflammation of the lining of the brain and spinal cord, or other infections.

Compounding pharmacies provide a vital service for patients, making individualized drugs for patients who cannot be treated with a standard preparation, for example, a patient who needs a different form of a medication or is allergic to ingredients in a standard medication. But in recent years, according to The New York Times, some compounders have in effect become mass manufacturers, distributing large quantities of medicines all over the country. Compounders, however, do not fall under the manufacturing and safety regulations that govern large drug manufacturers. Since the meningitis outbreak, the Food and Drug Administration (FDA) has asked Congress to expand its authority over compounding.